Domestic supply affect the price and quantity demanded

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Suppose France is an open economy and cannot influence the world price. If the world price is below the domestic equilibrium price, how would an increase in domestic supply affect the price and quantity demanded?

1) It would increase the price and the quantity demanded.

2) It would decrease the price and the quantity demanded.

3) It would decrease the volume of exports.

4) It would decrease the volume of imports.

Reference no: EM13987182

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